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Sensex hits new all-time high: 5 factors driving Indian stock market rally

The benchmark Sensex jumped 191.66 points to hit a fresh all-time high of 36,740.07 on Friday. (Image: Wikimedia Commons)

The S&P BSE Sensex index hit fresh all-time high in the early morning deals on Friday surging above yesterday’s record closing peak following the positive global cues and expectations of better-than-expected Q1 results for the financial year 2018-2019. The benchmark Sensex jumped 191.66 points to hit a fresh all-time high of 36,740.07 on Friday as shares of blue-chip companies Reliance Industries, Infosys, TCS and HDFC Bank surged 1%. BSE Sensex has taken more than 5 months to break the previous record highs set in January this year.

Going forward, Indian equity markets are likely to remain range-bound with regard to higher volatility. “We expect the markets to remain in a tight range albeit with higher volatility in 2018 given the busy political calendar ahead. Our relative preference stays with large caps as midcaps are still trading at premium to large-caps,” Gautam Duggad, Head of Research, Motilal Oswal Institutional Equities said.

5 Factors driving India’s stock market rally

Weakening of Crude

Crude oil prices have been on a weakening trend for the last couple of days and are set for second weekly fall. The markets have shrugged off a warning that spare capacity may be stretched as OPEC and Russia increase production, a Reuters report said. It has been a wild week for crude oil prices with both the Brent crude and US WTI crude suffering heavy losses on Wednesday as traders focused on the return of Libyan oil to the market amid concerns about a China-US trade war, the report added. Brent crude oil has lost nearly 4% in this week and a similar dip has been observed in WTI crude oil prices. Brent crude oil was trading down 0.24% at 74.27 while US WTI crude was trading up 0.09% at 70.39 per barrel on Friday, Bloomberg data showed

Stronger Rupee

The Indian rupee has regained most of its losses from the all-time low value of 69.0925 against the US dollar in recent days. The rupee added as much as 37 paise per unit US dollar in last two days and is now trading at 3-week highs. According to experts, the suspected intervention by the Reserve Bank of India (RBI) and capital infusion into Indian capital markets by FPIs have helped the rupee to pare losses. Today only, the rupee jumped by nearly 27 paise vs USD to 68.4050 from 68.5725, Bloomberg data showed.

Q1 Earnings Optimism

After India’s largest IT company TCS (Tata Consultancy Services) Q1 results beat analyst expectations, market participants are keenly awaiting for the upcoming Q1 results. Going forward in the month, big blue-chips such as HDFC Bank, Kotak Mahindra Bank, Infosys are set to announce their respective Q1 FY19 results.

Firm Asian peers

Most of the Asian stock markets edged up on Friday following the sharp uptick in the Wall Street indices on Thursday with tech heavyweights Microsoft, Amazon and Facebook closing at their respective record highs. Among the regional Asian stocks, Japan’s Nikkei added 1.3% to 22,483.13, South Korea’s Kospi surged 0.8% to 2,302.32, Hong Kong’s Hang Seng soared 0.3% to 28,578.86 while China’s Shanghai Composite slid 0.6% to 2,821.73.

Wall Street rally

US stocks climbed on Thursday as top technology names hit record highs and industrials rebounded from losses driven by trade worries the day before, Reuters said in a report. Shares of Facebook, Microsoft and Amazon hit all-time highs and, along with Apple and Alphabet, drove gains in the S&P 500 and Nasdaq. The Dow Jones Industrial Average rose 224.44 points or 0.91% to 24,924.89, the S&P 500 gained 24.27 points or 0.87% to 2,798.29 and the Nasdaq Composite added 107.31 points or 1.39% to 7,823.92. Bill Gates-led Microsoft’s market capitalisation rose beyond $800 billion for the first time after its shares rallied over 2%.

Source: Financial Express